Small-Caps, Big Buybacks: 3 Stocks With Large Buyback Capacity

Key Points

• Three small caps just announced substantial share buyback announcements. 
• The three stocks now all have buyback capacity equal to 10% or more of their market capitalization. 
• One stock also boosted its dividend by 20%, giving it an indicated yield of 4%.

While the largest companies in the world rightfully grab the most attention when they announce buyback authorizations, small caps also deserve recognition for their plans to return capital to shareholders. Small caps are generally defined as stocks with market capitalizations between $250 million and $2 billion. Their buyback announcements are inherently much smaller. It’s unlikely to see any figures in the “billion” range.

However, buybacks worth tens of millions or hundreds of millions of dollars can greatly lower these firms' total share count. This provides a tailwind for their earnings per share, potentially doing the same for their share price.

Below are three small-cap stocks that recently announced new share buyback authorizations. All now have total buyback capacity equal to 10% or more of their market capitalization. This allows management to substantially impact their outstanding share count through buybacks over time. All return, dividend yield and percentage of buyback capacity to market capitalization figures use data as of the Mar. 21 close.

Fresh Del Monte Produce: Substantial Buyback Announcement Coupled With a Dividend Boost

First up is the food and agriculture company Fresh Del Monte Produce NYSE: FDP. The company recently announced a share buyback authorization worth $150 million. This is equal to just over 11% of the company’s $1.42 billion market capitalization. There is no set date by which the authorization will end, and its firm intends to “execute this program opportunistically over time." Fresh Del Monte produces and distributes fresh fruit and vegetables, as well as canned items. Pineapples and bananas are particularly strong drivers of the company’s revenue, with bananas alone making up 34% of total revenue in 2024.

In addition, Fresh Del Monte announced a substantial increase to its next quarterly dividend of 20%. The consumer staples stock is boosting its indicated dividend yield with this announcement, which now sits just above 4%. Over the past ten years, the firm has averaged annual spending on share repurchases of $48 million per year. However, over the last five years, spending on repurchases has averaged just $7 million annually. This creates significant uncertainty around how long it could take FDP to utilize the whole $150 million.

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Axcelis Technologies: Small Chip Equipment Stock with Big Buyback Capacity

Axcelis Technologies NASDAQ: ACLS is a small-cap semiconductor stock worth $1.8 billion. It just announced a buyback authorization worth $100 million. This brings Axcelis's total buyback capacity to $215 million. This figure is equal to 12% of the firm’s market cap. Axcelis is a chip manufacturing equipment maker specializing in ion implantation. Most of the company’s shipped systems in 2024 were for mature node technologies. This shows that its systems are generally not used to make advanced chips.

The mature chip market has been in a downturn, contributing to the company’s 10% revenue drop in 2024. However, from 2021 to 2023, the company saw revenue growth of 23% or more.

The firm hopes that a recovery in this market, as well as secular growth in silicon carbide (SiC)-based wafers, will create long-term growth. SiC accounted for 41% of total revenue in 2024. It also wants to increase its market share in advanced logic chip manufacturing. This only made up 1% of its business in 2024. However, the company has significant short interest of 14%, indicating substantial bearish sentiment around the stock.

Fiverr International: Announces Second $100 Million Buyback Program in Under a Year

Last up is Fiverr International NYSE: FVRR, a company that operates an online marketplace for freelance services. In April 2024, Fiverr announced its first-ever share repurchase authorization, worth $100 million. The company utilized all this authorization in 2024. The firm announced another $100 million buyback authorization on Mar. 11. This is equal to just under 11% of the firm’s $922 million market capitalization.

The company has done well in growing revenue and increasing profitability since its 2019 initial public offering. Revenue has increased by 365%. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin has gone from deeply negative to solidly positive. However, its annual revenue growth rate from the COVID-era peak of 77% has dropped massively to just 8% in 2024. Overall, the stock has remained down nearly 36% since June 13, 2019.